ROME (Reuters) - Italian Prime Minister Matteo Renzi said on Tuesday he would delay corporate income tax cuts until 2017, choosing instead to increase spending on security and culture next year.
Renzi had said he would make some corporate tax cuts in 2016 as long as the European Union allowed the country to exclude spending on the migration crisis from deficit calculations.
Speaking at Rome’s city hall 11 days after jihadists killed 130 people in Paris, Renzi said he would propose spending an extra 1 billion euros ($1.07 billion) on security next year, and boost spending on “cultural identity” by the same amount.
Renzi acknowledged Italy’s budget-setting flexibility is limited by the European Union’s Stability and Growth Pact.
“We respect the rules even when we don’t share them because it’s the best way to be credible, but we urge Europe to respect a humanity pact which is more important than a stability pact,” Renzi said.
Brussels has warned four countries including Italy, whose public debt is the highest in the euro zone after Greece’s, that their draft 2016 budgets could break the rules.
When European Commission President Jean-Claude Juncker said last week that France could get special treatment for security spending after the Paris attacks, Renzi was quick to say the same should apply for Italy.
The spending announced on Tuesday will be plowed into military defense, online security, strengthening and streamlining the police force, and boosting the salaries of officers on the street, Renzi said.
As part of the investment in culture, Italy will set up bursaries to study, develop poor urban areas, give 18-year-olds money to spend on theater and concert tickets and allow people to donate directly to specific cultural organizations.
Reporting by Steve Scherer and Isla Binnie; editing by Susan Thomas